By Gertrude Chavez-Dreyfuss

NEW YORK (Reuters) – Sterling hit its highest level against the U.S. dollar in more than two years on Tuesday, while the U.S. dollar fell to its lowest in more than a year after rising in the previous session, as investors awaited key economic data this week and next.

Currency moves continued to be driven by the prospect of imminent U.S. interest rate cuts, which have been putting pressure on the dollar in recent weeks. Investors see a rate cut at the Federal Reserve’s September meeting as all but certain, with debate now turning to the possibility of a 50 basis point (bp) cut instead of 25.

The interest rate futures market has assigned a 37% probability that the Fed will raise rates by 50 basis points, unchanged from delayed Friday, according to LSEG calculations. About 106 basis points of cuts in 2024 are priced in by futures traders.

“The dollar has been weaker since Jackson Hole, but I think it’s more sideways than anything else,” said Eugene Epstein, head of North America structured products at Moneycorp in New York, referring to last week’s Kansas City Federal Reserve symposium in Jackson Hole, Wyoming.

“(Federal Reserve Chairman Jerome) Powell’s comments were ultimately seen as dovish by any standard. Non-American wealth assets like cryptocurrencies also rebounded a bit. So this is all seen as a dovish continuation of Friday’s Jackson Hole.”

One of the beneficiaries of the weaker US currency was the pound sterling, which on Tuesday hit its highest rate since March 2022, reaching $1.3246. It was last up 0.3% at $1.3226.

The pound gained support from the contrast between Powell’s comments on Friday, which stressed that the market was pricing in significant US rate cuts from next month, and more cautious comments from Bank of England Governor Andrew Bailey.

BIG MONTHLY DECLINE FOR THE DOLLAR

The dollar fell 0.3% to 100.53, after earlier falling to its lowest level since July last year. The greenback fell 3.2% in August, heading for its biggest monthly decline since November 2022.

The U.S. dollar fell slightly after data showed U.S. home prices fell 0.1% month-on-month after remaining unchanged in May. They rose 5.1% in the 12 months to June, the smallest year-on-year boost since July 2023.

Tuesday’s report also showed U.S. consumer confidence rose in August. The Conference Board’s consumer confidence index rose to 103.3 this month from a revised 101.9 in July. The market, however, reacted only modestly to the data.

Investors are awaiting data on the preliminary estimate of second-quarter gross domestic product, jobless claims and the consumer expenditure index (PCE), the Fed’s preferred measure of inflation.

The euro gained 0.2% against the dollar to $1.1181, just below Monday’s 13-month high.

“After a strong rally since early August, the euro/dollar looks like it could be consolidating,” Chris Turner, global head of markets at ING, said in a note to clients.

“The rise in oil prices due to rising tensions in the Middle East and supply challenges to Libya will not help.”

Oil prices also halted recent gains, falling more than 2% on Tuesday after rising more than 7% in the previous three sessions, dragged down by supply concerns amid fears of a wider conflict in the Middle East and a potential shutdown of Libyan oil fields. [O/R]

One currency that gained on the back of rising oil prices was the Canadian dollar, which rose against the U.S. currency to a five-month high earlier in the session. The U.S. dollar was last down 0.3% at C$1.3449.

Elsewhere, the Australian dollar rose 0.3% to $0.6791, just off a one-month high of $0.6799 reached on Friday.

Against the Swiss franc, the dollar fell to its lowest level since early January, last losing 0.7% to 0.8414 francs.

Currency

offer

prices in

27

August

07:46

afternoon GMT

RIC Description Last Percent USA YTD Percent Highest Lowest

in Close Change offer Offer

Previous

Session

Dollar 100.55 100.85 -0.29% -0.81% 100.93 100.

index 51

Euro/Dollar 1.1184 1.1161 0.21% 1.32% 1.1191 USD 1.1

about 15

Dollar/Ye 143.95 144.56 -0.35% 2.14% 145.135 143.

No. 89

Euro/Yen 1.1184​ 161.29 -0.18% 3.45% 162.17 160.

88

Dollar/Swiss 0.8414 0.8473 -0.7% -0.03% 0.8484 0.84

edition 1

Pound sterling/ 1.3259 1.3187 0.56% 4.2% 1.3269 1.1

Dollar 15​

Dollar/Ca 1.3448 1.3486 -0.26% 1.46% 1.3488 1.34

Nadian 45

Australian/Up to 0.6791 0.6772 0.3% -0.39% 0.6796 USD 0.6

762

Euro/Switzerland 0.941 0.9455 -0.48% 1.34% 0.9474 0.94

p 08

Euro/Star 0.8432 0.8463 -0.37% -2.72% 0.8468 0.84

linga 33

New Zealand 0.625 0.6204 0.74% -1.09% 0.6254 0.61

Dollar/Up to 95

ll

Dollar/No 10.4634​ 10.5295 -0.63% 3.24% 10.5539 10.4

road no. 537

Euro/Norway 11.7036 11.7726 -0.59% 4.27% 11.786 11.6

there are 842

Dollar/Swedish currency 10.1457 10.213 -0.66% 0.78% 10.2275 10.1

Paradise 32

Euro/Sweden 11.3478 11.4016 -0.47% 2% 11.4184 11.3

in 368

(Article reposted to insert omitted word “than” in headline)